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August 4, 2021
BUSINESS

G20 backs plan to stop global tax avoidance and evasion


Finance ministers and central bankers from the Group of 20 (G20) countries are discussing the prospect of more market turbulence as three powerful countries – the United States, China, and Japan – move toward economic recovery, according to Radio Free Europe. G20 ministers, representing the world’s leading economies, met in Moscow on July 19 at the start of a two-day meeting. They were expected to call for greater clarity in the way financial authorities signal their policy decisions, which impacts global stock and bond markets. The G20 is also backing policy changes aimed at closing loopholes used by multinational firms to avoid taxes. The G20, a forum that took the lead in dealing with the 2008-09 financial crisis, now faces the challenge of dealing with a multispeed global economy. The Moscow meeting is also part of preparations for a G20 summit in September in Moscow.  Russia is the current holder of the annual presidency of the G20. The meeting comes a day after a Russian court sentenced a top opposition leader, Aleksei Navalny, to five years in jail, a ruling that has been widely criticized in the West and elsewhere.
A statement issued Friday supports the automatic exchange of tax information between countries. It also backs plans by the Organisation for Economic Cooperation and Development to stop firms moving their profits across borders to avoid taxes, BBC informs. The OECD said some firms “abuse” current rules to avoid tax. UK Chancellor George Osborne said the announcement, which came after a two-day G20 meeting in Moscow, was an “important step towards a global tax system that is fair and fit for purpose for the modern economy”.
Boosting jobs rather than deficit reduction
The G20 agreed to make boosting jobs and overall economic growth the short-term priority rather than deficit reduction. The statement said jobs could be boosted by re-balancing global demand and reducing fragmentation of financial markets. Among the issues discussed was the possibility the US Federal Reserve might curb its monetary stimulus and money printing, .xinhuanet.com informs. Emerging markets were especially concerned at the possibility that their fragile economies could be hit by a sudden about-turn in US policy. The statement however promises that any changes to monetary stimulus packages would be “carefully calibrated and clearly communicated.” Overall the trend for the future should be to reduce budget deficits, especially for Europe where many countries fall into a recession. “(Our G20) colleagues have not made the decision to take responsibility to lower deficits and debts by 2016,” Russia’s finance minister Anton Siluanov said on the fringes of the meeting in Moscow, adding that “some people thought that first you need to ensure economic growth.”
European markets fall
European markets opened lower on Friday as investors wait to hear the outcome of the G20 finance leaders meeting in Moscow. According to Wall Street Journal, The Stoxx Europe 600 index opened 0.2 pc lower to 299.07 while Britain’s FTSE 100 opened 0.3 pc lower in early deals. Germany’s DAX and France’s CAC 40 opened 0.4 pc lower, Spain’s IBEX 35 was down 0.27 pc and Italy’s FTSE MIB was down 0.24 pc. In Asia, the Japanese Nikkei finished 1.48 pc lower on Friday. Australia’s S&P/ASX index closed 0.46 pc lower while South Korea’s Kospi ended 0.22 pc lower. Ahead of the G20 meet, US Treasury Secretary Jack Lew asked Europe to focus on boosting growth, just as President Obama has done since the 2008 financial crisis. “The US is again a source of strength in the world economy, only five years after it was the centre of a global crisis. This has not happened by accident,” Lew said in an op-ed published in the Financial Times.

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